The suspension of visa operations by India and Canada would not have a major impact on bilateral trade in the medium or long-term or disrupt investments, according to officials and trade experts.
“Most of the orders, unless a supplier is new, are now being placed online. For new entrepreneurs who want to start exporting to Canada, there ay be a challenge as buyers may not be able to travel. Rest of the exports will continue (unaffected),” Director General and Chief Executive Officer of Federation of Indian Export Organisations Ajai Sahai said.
In the short-term, travel of businessmen could be constrained but it would not have any pronounced impact on trade, founder of Global Trade Research Initiative Ajay Srivastava, said, citing the fact that the border stand-off with China hasn’t dented trade with the neighbour. “One or two months of frenzy does not impact trade ties,” he added.
A senior government official said even the investment ties are unlikely to be undermined by the stand-off. “They (Canadian Investors) are here because they are making higher returns here… So I don’t see any reason for them to back out because of the current situation, which hopefully we will sort out,” the official said. “I don’t see any immediate impact on Indian investments into Canada either,” the official added.
As the stand-off between India-Canada intensified, India on Thursday announced closure of visa processing for Canada citing concerns over security of staff at its missions.
Sahai said if the stand-off continues then the uncertainty may rise as both sides may take actions to actively stop imports from the other country.
Bilateral trade between India and Canada has grown significantly in recent years, reaching $8.16 billion in FY2023. India’s exports ($4.1billion) to Canada include pharmaceuticals, gems and jewelry, textiles, and machinery, while Canada’s exports to India ($4.06 billion) include pulses, timber, pulp and paper, and mining products.
Both India and Canada trade in complementary products and do not compete on similar products. Hence, the trade relationship will continue to grow and not be affected by day to day events, Srivastava said.
The Foreign Direct Investment from Canada into India aggregated at $3.3 billion between 2000-2023 and Indian investment into Canada at $2.06 billion.
Though FDI from Canada may look small in absolute terms, some of the biggest Canadian companies are present in India and may have routed their investments through other geographies.
The portfolio investments by Canadian funds are, however, huge. These stood at $ 45 billion by the end of 2022.
The top sectors for Canadian pension fund investment in India include infrastructure, renewable energy, technology, and financial services, according to GTRI’s analysis.
Largest investments by Canadian pension funds in India was made in 2022, when the Canada Pension Plan Investment Board (CPPIB) invested $1.1 billion in India Grid Trust
Some of the biggest companies Canadian companies operating in India include Brookfield Asset Management, Caisse de dépôt et placement du Québec (CDPQ), Canada Pension Plan Investment Board (CPP Investments), Manulife Financial, Bombardier, McCain Foods, Scotiabank, TD Bank and Tim Hortons.
Indian companies operating in Canada include Tata Group, Infosys
Last year Tata Group announced an investment of $ 750 million in Canada over five years. This year Infosys and Wipro have announced expansion plans in Canada.
India and Canada have a strong education partnership. There are over 200 educational partnerships between Indian and Canadian institutions. In addition, over 319,000 Indian students are enrolled in Canadian institutions, making them the largest international student cohort in Canada.
According to the Canadian Bureau for International Education (CBIE), Indian students contributed $4.9 billion to the Canadian economy in 2021. Indian students are the largest international student group in Canada, accounting for 20% of all international students in 2021.
Benefits of educational partnerships are mutual and hence there may be no impact on it due to the current situation, Srivastava added.
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